Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - ION GEOPHYSICAL CORP | ex991earningsrelease2017-q1.htm |
| 8-K - 8-K - ION GEOPHYSICAL CORP | a8k-2017xq1xearnings.htm |
ION Earnings Call – Q1 2017
Earnings Call Presentation
May 4, 2017
Corporate Participants and Contact Information
CONTACT INFORMATION
If you have technical problems during the call, please contact DENNARD–LASCAR Associates
at 713 529 6600.
If you would like to view a replay of today's call, it will be available via webcast in the Investor Relations
section of the Company's website at www.iongeo.com for approximately 12 months.
BRIAN HANSON
President and
Chief Executive Officer
STEVE BATE
Executive Vice President
and Chief Financial Officer
2
Forward-Looking Statements
The information included herein contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934.
Actual results may vary fundamentally from those described in these
forward-looking statements.
All forward-looking statements reflect numerous assumptions and involve a
number of risks and uncertainties.
These risks and uncertainties include risk factors that are disclosed by ION
from time to time in its filings with the Securities and Exchange Commission.
3
Revenues $M
4
• Revenues of $33M
• Up 44% compared to Q1-16
• Driven in part by continued strong
sales of Campeche program and an
increase in data library sales
• Nearing completion on last major
financial challenge, patent
litigation with WesternGeco
• Recent ruling indicated that we will
be held to have willfully infringed
• We will be ordered to pay $5M
when the final order is issued, low
end of maximum range up to $44M
• Eight-year-old lawsuit does not
reflect the current spirit of
collaboration with WesternGeco
ION Q1-17 Financial Highlights
(3.30)
(1.55)
$(3.50)
$(3.00)
$(2.50)
$(2.00)
$(1.50)
$(1.00)
$(0.50)
$-
Adjusted EPS
Q1-16 Q1-17
(35)
(18)
($40)
($35)
($30)
($25)
($20)
($15)
($10)
($5)
$0
Adjusted Net Loss
Q1-16 Q1-17
23
35
33
$-
$5
$10
$15
$20
$25
$30
$35
$40
Q1-16 Q4-16 Q1-17
(17)
0
$(20)
$(15)
$(10)
$(5)
$-
Q1-16
Adjusted EBITDA $M
Q1-17
ION Q1-17 Highlights
5
E&P Technology & Services E&P Operations Optimization
Completed 39 deployments total of
Marlin, adding significant value for
clients
Received Scottish Enterprise funding
for Marlin software development
Renewed long-term command and
control contract with major customer
Ocean Bottom Seismic Services
Continue to work on, and are strongly
positioned for, tenders in the region
Aligned with E&P companies’
production objectives, OBS tender
activity increased significantly: 20
projects worth over $1B announced to
take place over the next two years
Significant increase in new venture
and data library revenues
Increase in Campeche sales pipeline
due to upcoming Mexico bid rounds
and new bid round regulations
– Continue receiving positive feedback on
turnaround time and imaging uplift
Imaging Services group close to fully
utilized, primarily on higher potential
projects
New venture activity picking up. We
sanctioned 3 programs, which met our
conservative underwriting standards,
to kick off in the next 90 days.
E&P Advisors awarded contract to
provide technical advice for Faroe
Islands Licensing Round
R&D Programs Positioning ION for Upturn
Maintained R&D programs through the downturn, which are key to
positioning ION to take advantage of the impending market upturn
Introducing a new nodal OBS solution, 4Sea®, providing a step change
in image quality and efficiency, driving down the cost of acquisition and
improving economics so it can be applied to more production projects
Industry-leading FWI imaging technology is new approach to develop
data-driven reservoir models, ultimately increasing resolution and
contrast to improve reservoir understanding and production
Devices group commercialized three new technologies that provide
valuable new capabilities for our marine contractor customers while
leveraging their existing equipment
6
DigiLIFT™
Rechargeable batteries Acoustics in Deployment
(3.30)
(1.55)
$(4.00)
$(3.00)
$(2.00)
$(1.00)
$-
Adjusted EPS
Q1-16
7
ION Financial Overview
Q1-17 Summary
$-
$10
$20
$30
$40
Q1-16 Q1-17
23
33
44%
OBS Services
E&P Ops E&P T&S
Revenue $M • Revenues up 44% vs Q1-16
• E&P Technology & Services up 79%
• E&P Operations Optimization down 4%
• No revenues from Ocean Bottom Seismic
Services
•Operating loss of $14M compared to $30M
in Q1-16
• Favorability driven by increase in revenues
related to Campeche program and data library
sales in addition to the positive impact of cost
savings initiatives
• Break-even Adjusted EBITDA compared to
$(17)M in Q1-16
• Third consecutive quarter of break-even or
better and first time since Q1-14 with break-
even or better in first quarter of the year
• Adjusted EPS of $(1.55) compared to
$(3.30) in Q1-16
(30)
(14)
($40)
($30)
($20)
($10)
$0
T
h
o
u
s
a
n
d
s
Q1-16 Q1-17
Q1-17
Operating Loss $M
(17)
0
$(20)
$(15)
$(10)
$(5)
$-
Q1-16
Adjusted EBITDA $M
Q1-17
ION Financial Overview
Cash Flow $M
8
• Net cash flows from operations
of $2.0M in Q1-17 vs $2.5M in
prior year
• Ability to generate cash from
operations in Q1-17
demonstrates rightsizing of
business
• Total net cash flows of $(3.0)M
in Q1-17 vs $(8.2)M in Q1-16
• Cash balance of $40M,
excluding borrowings under
credit facility
• Credit facility borrowings of $10M
• Remaining availability of $10M
hindered by exclusion of
Campeche non-qualifying high
quality receivables
• Canceled “at-the-market”
equity program
Q1-16 Q1-17
Net loss (35.0)$ (23.0)$
Non-cash adjustments 13.6 17.6
Working capital 23.9 7.4
Net cash from operations 2.5 2.0
Multi-client investment (6.3) (3.4)
PP&E capital expenditures (0.3) (0.1)
Net cash from investing activities (6.6) (3.4)
Repurchase of common stock (1.0) -
Payments of debt (2.2) (1.7)
ther financing activities (1.3) (0.3)
Net cash from fin cing activities (4.5) (2.0)
Effect of change n f/x 0.3 0.4
Net change cash (8.2) (3.0)
Cash & cash equiv. (beg. of period) 84.9 52.7
Cash & cash equiv. (end of period) 76.7$ 49.7$
Summary
Expect E&P market to start improving
– Expect a modest increase in 2017 E&P spending
– Expect growth in seismic spending to lag behind other oil and gas segments
– OBS tender activity has picked up and we are seeing renewed interest in
underwriting new venture programs for the first time in two years
– Well positioned with data libraries in areas of counter-cyclical activity ahead
of upcoming license rounds
– Excited about new technology we are commercializing and believe there is
significant potential around Marlin
Expect 2017 to be a transition year for ION
– Believe 2017 will be a modest improvement over 2016
– Believe first half will be softer than the back half, especially considering back
half license round activity and natural purchasing patterns of our customers
– Maintained our capabilities, our workforce and our R&D programs – we’re
actively positioning ourselves to take full advantage of a more normal 2018
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Q&A
